What happens during a property valuation.
A valuation is a key step in the home loan process. Whether you’re buying, refinancing or releasing equity, the lender needs confidence that the property offers adequate security for the loan. While valuations are often straightforward, the experience can vary depending on the property, the lender and the type of valuation performed.
At Lumo, we help clients understand what to expect, how different valuation methods work, and what to do if a valuation comes in lower than anticipated.
Why valuations matter
A valuation helps the lender answer three core questions:
What is the property worth today?
Is the bank comfortable lending against it?
Does the loan amount fit within acceptable LVR limits?
The valuation impacts:
Borrowing power
Usable equity
Loan-to-Value Ratio (LVR)
Approval outcome
Interest rate tiers (for some lenders)
A solid valuation gives your loan application a smoother path to approval.
Types of property valuations
Depending on the lender and property, different valuation methods may be used:
1. Automated Valuation Model (AVM)
A computer-generated estimate using sales data and algorithms.
Used when risk is low and data is plentiful.
Pros: Instant, free, no site visit.
Cons: Not suitable for unique or renovated homes.
2. Desktop valuation
A valuer assesses the property using images, online data and recent comparable sales — no physical inspection.
Pros: Fast and inexpensive.
Cons: Limited accuracy for unusual or poor-condition properties.
3. Kerbside/drive-by valuation
A valuer visits the street, observes the exterior, and reports based on appearance and comparable sales.
Pros: Quick inspection with more context than desktop.
Cons: No interior assessment.
4. Full valuation (internal & external)
A valuer inspects the property inside and out, reviews upgrades, layout and condition, and compares it to similar recent sales.
Pros: Most accurate and widely accepted.
Cons: Takes longer and may involve a fee for the owner or lender.
What valuers look for during an inspection
A valuer considers:
Location and surrounding properties
Land size, zoning and topography
Build quality and age
Condition of interior and exterior
Number of bedrooms, bathrooms and living areas
Renovations or upgrades
Flow, functionality and natural light
Comparable recent sales
Unique features or limitations
Market demand in the area
They assess the property’s true market position, not its listing price.
How to prepare your property for a valuation
You don’t need a full makeover — but presentation helps.
Simple steps that improve clarity:
Make sure access is easy and all rooms are available
Tidy main living areas
Highlight renovations, upgrades or improvements
Provide any relevant documentation (plans, approvals, recent sales)
Valuers don’t judge styling, but a clean and organised home makes it easier for them to assess the property accurately.
What happens if the valuation is lower than expected?
A short valuation doesn’t mean the end of your plans. There are options:
1. Reassessing lender choice
Some lenders use different valuation panels, which can produce different results.
2. Ordering a second valuation
If there’s strong evidence that the first was inaccurate, a reassessment may be possible.
3. Adjusting the loan structure
This could include reducing the loan amount or increasing the deposit.
4. Showing additional comparable sales
Sometimes new sales in the area support a higher figure.
At Lumo, we manage this process carefully to avoid extra cost or multiple hits to your credit file.
What happens next?
If the valuation meets or exceeds expectations, the lender progresses toward final approval.
If it comes in short, we explain your options clearly and recommend the best path forward based on your goals.
Either way, a clear strategy keeps everything on track.
Let’s chat.
If you’re preparing for a valuation, wanting to understand what affects the outcome, or navigating a low valuation result, we can support you through the process. Let’s chat.
This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.